antitrust enforcement under the trump administration · crowell & moring | 1 antitrust...

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Antitrust Enforcement Under The Trump Administration

December 11, 2018

Juan A. ArteagaAlexis J. GilmanChristine L. White

Presentation reflects the speakers’ views and not necessarily those of their employer or any client.


• Biography Deputy White House Counsel Law firm partner focused on lobbying/policy Antitrust Division DAAG for Appellate, International and Policy (2003-2005) Chief Counsel, Senate Judiciary Committee

• Priorities Remedy Reform (including review/elimination of old consent decrees) IP Enforcement Shift Prosecution of No-Poach/Wage-Fixing Agreements International Engagement

DOJ Antitrust Division LeadershipAssistant Attorney General Makan Delrahim


• Chairman Simons Biography

Law firm Antitrust Partner

Director, FTC Bureau of Competition (2001-2003)

Strong background in complex merger and economic analysis

• Priorities:

Active Merger Enforcement

Focus on Key Industries – e.g., Healthcare and Technology Industries

Privacy and Related Consumer Protection Issues

Federal Trade CommissionCommissioners

Joseph Simons (R)(Chairman)

Christine Wilson (R) Noah Phillips (R) Rebecca Slaughter (D) Rohit Chopra (D)


7 Key Takeaways From First Two Years1. Lost Trial Challenging AT&T’s Acquisition of Timer Warner

o First litigated challenge to vertical merger in U.S. in nearly half a centuryo Many have questioned whether the lawsuit was politically driveno This is the DOJ’s first trial loss in a merger challenge since 2004o Recent appellate hearing suggested that D.C. Circuit will affirm trial court decisiono Key questions raised by this decision:

Will the DOJ reconsider its recent skepticism of behavioral remedies in merger investigations? Does this mark the end of renewed scrutiny of vertical mergers? The DOJ’s last loss in a merger challenge caused it not to bring another challenge for 7 years –

will this happen again?


7 Key Takeaways From First Two Years (cont.)2. Not As “Merger Friendly” As Expected

o Contested Merger Challenges: 9o Consummated Merger Challenges: 3o Abandoned Mergers: 7o Merger Trials: 6

3. Significant Policy Shifts and Growing Agency Differenceso Behavioral remedies – increased skepticism at DOJ … less so at FTC? o New Vertical Merger Guidelines – DOJ issuing next year … without FTC coordination?o Merger review process – streamlining at DOJ … without FTC coordinationo Consent decree terms – new terms at DOJ ... new FTC view on pipeline pharma productso IP-rights enforcement as an antitrust violation – DOJ skeptical … FTC less soo Criminal fines/sentences – possible reductions when companies have compliance

programs in place when antitrust offenses occurred


7 Key Takeaways From First Two Years (cont.)4. FTC Hearings on Competition and Consumer Protection in the 21st Century

o Series of 15-20 hearings (8 done) and public comments on range of antitrust issueso Focus on hot topics in antitrust law, e.g.,

monopsony (buyer) power labor/employment issues vertical mergers big data/platforms/technology common (stock) ownership

o Intended to evaluate short- and long-term law enforcement and policy agendao What comes next?

5. Continued active enforcement in civil conduct (non-merger) areao Cases involving IP rights (Qualcomm, 1-800 Contacts, Impax)o FTC planning to be as or more active (Benco, Louisiana RE Appraisers)o DOJ has been active in healthcare, employment, and advertising industries

“We are looking for good conduct cases. You can expect more to come… We are not at all complacent about enforcement. We want to be busier.”– FTC Bureau of Competition

Dir. Bruce Hoffman


6. Significant Decline In Criminal Enforcement Statisticso There has been a substantial decline in fines imposed by the DOJ during the past two years

FY 2015: $3.6 billion FY 2016: $399 million FY 2017: $67 million

o The number of corporations and individuals charged has also declined during this period FY 2015: 66 individuals and 20 corporations charged FY 2016: 52 individuals and 19 corporations charged FY 2017: 27 individuals and 8 corporations charged

o Downward trend reflects natural life-cycle of cartel investigations rather than less vigorous enforcement Fine and criminal charges will likely increase in coming years as large investigations progress Key investigations to watch include: generic drugs, Foreign Exchange, LIBOR, and no-poach/wage-fixing

o In 2017, DOJ tried a record 9 cartel cases and won all of them Trials were in its real estate foreclosure auctions investigations

o This past September/October, DOJ won a LIBOR trial and lost a Foreign Exchange trial in SDNY

7 Key Takeaways From First Two Years (cont.)


7 Key Takeaways From First Two Years (cont.)7. Dealing With Presidential Statements And Tweets About Antitrust Enforcement Matters Is The New Normal

o “Why doesn’t the Fake News Media state that the Trump Administration’s Anti-Trust Division has been, and is, opposed to the AT&T purchase of Time Warner in a currently ongoing Trial. Such a disgrace in reporting!”– President Trump, May 11, 2018

o “The Fake News Networks, those that knowingly have a sick and biased AGENDA, are worried about the competition and quality of Sinclair Broadcast. The ‘Fakers’ at CNN, NBC, ABC & CBS have done so much dishonest reporting that they should only be allowed to get awards for fiction!” – President Trump, April 3, 2018

o “I know that the president spoke with Rupert Murdoch earlier today, congratulated him on the [Disney/Fox] deal. [President Trump thinks] that, to use one of the president’s favorite words, this could be a great thing for jobs, and certainly looks forward to and hoping to see a lot more of those created.” – White House Press Secretary Sarah Sanders, December 14, 2017

o “Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs” – President Elect Trump, December 6, 2016

o “I leave it to others, but I do have a lot of people talking about monopoly when they mention those three [Amazon, Facebook, and Google] in particular.” President Trump, November 4, 2018


Noteworthy Merger Investigations


Key DOJ Merger Investigations• Completed Merger Investigations

o Parker-Hannifin/CLARCOR (challenge to consummated $4.3 billion merger in aerospace industry)

o Cigna/Express Scripts ($67 billion vertical merger that would combine nation’s largest independent pharmacy benefit manager with fifth largest health insurer)

o CVS/Aetna ($69 billion vertical merger that would combine nation’s largest retail pharmacy chain with third largest health insurer)

o Disney/Fox ($52 billion transaction that would allow Disney to acquire various important television, cable, and movie assets)

o Sinclair Broadcast/Tribune Media ($3.9 billion merger abandoned after FCC commenced administrative hearing)

o Bayer/Monsanto ($66 billion merger involving two of the largest agricultural companies in the world)

• Pending Merger Investigations

o T-Mobile/Sprint ($26.5 billion merger between the nation’s third and fourth largest wireless carriers)

o Nexstar/Tribune ($4.1 billion merger would create nation’s largest television station company)


Key FTC Merger Investigations• Completed Merger Investigations

o Litigated/filed challenges

Sanford/Mid Dakota Clinic (physician group acquisition raising buyer power defense; on appeal to 8th Cir.)

Otto Bock /Freedom Innovations (post-closing challenge to merger of microprocessor prosthetic knee sellers)

Smucker/Conagra (challenge leads to abandonment of $285M acquisition of Wesson canola and vegetable oil)

Wilhelmsen /Drew Marine (enjoining $400M acquisition of provider of water treatment chemicals used in global fleets)

Tronox/Cristal (full trial followed by PI hearing (say what?) to block $1.7B acquisition of chloride process TiO2 producer)

CDK/AutoMate (challenge leads to abandonment of merger involving upstart in DMS software industry)

DraftKings/FanDuel (challenge leads to abandonment of merger of leading daily fantasy sports providers)

o Select investigations resolved by consent order or closed without action

Northrop Grumman/Orbital, Broadcom/Brocade, Essilor/Luxottica, Amazon/Whole Foods, Beth Israel/Lahey

• Pending Merger Investigations

o Staples/Essendant ($996M merger of leading office supply retailer/distributor and leading office supplies wholesaler)


Key Civil Non-Merger Investigations


• During Obama administration, DOJ and FTC issued human resource guidelines indicating that:

o naked “no poaching” and “wage fixing” agreements would no longer be prosecuted as civil violations and instead would be treated as criminal violations

o companies and individuals could be criminally prosecuted for entering these agreements if they compete for employees, regardless of whether they compete to sell the same products or services

• The Antitrust Division’s current leadership team has made prosecuting “no poaching” and “wage fixing” agreements a top priority

o “No More No-Poach: The Antitrust Division Continues to Investigate and Prosecute ‘No-Poach’ and Wage-Fixing Agreements” – Antitrust Division Spring 2018 Update

o “Today’s complaint is part of a broader investigation by the Antitrust Division into naked agreements not to compete for employees – generally referred to as no-poach agreements.” – AAG Makan Delrahim

o “As our Assistant Attorney General explained last week, the Division expects to initiate multiple no-poach enforcement actions in the coming months.” – DAAG Andrew Finch

o “No poach agreements warrant criminal condemnation because, like customer allocation agreements, they are inherently anticompetitive and have no redeeming value.” – DAAG Barry Nigro

No-Poach and Wage Fixing Investigations


• In April 2018, the Antitrust Division announced its first no-poaching prosecution since issuing its human resource guidelines

o Knorr-Bremse and Westinghouse Air Brake Technologies Corp. agreed to settle allegations that they entered into various no-poaching agreements with each other and a third company

o The Antitrust Division treated these no-poach agreements as civil, rather than criminal, violations because the companies terminated the agreements prior to the Division issuing its human resource guidelines

• Key Takeaways from Settlement

o The Antitrust Division’s press release and subsequent statements make clear that it will criminally prosecute any no-poach agreements that either were formed or continued after the human resources guidelines were issued

o The Antitrust Division’s press release and subsequent statements make clear that it plans announce additional no-poach and wage fixing enforcement actions

o The companies are required to reimburse the Antitrust Division for any costs associated with investigating and prosecuting their failure to comply with the settlement

o The Antitrust Division’s complaint made a concerted effort to detail the role that the companies senior executives played in forming and enforcing the no-poach agreements

o A class action lawsuit was filed against the companies within days of the settlement being announced

Key Takeaways From DOJ No-Poach Prosecution


• Led by the Washington State AG, several state AGs are investigating the no-poach clauses in the franchise agreements used by numerous fast food chains

o About 20 companies have thus far entered settlements requiring them to eliminate these clauses

• Two months ago, the state AGs announced that were expanding these investigations outside the fast food industry

o Since this announcement, national chains in the automobile services, spa, and insurance industries have entered settlements agreeing to eliminate the no-poach clauses in their franchise agreements

• Private plaintiffs’ attorneys have filed class action lawsuits against the companies that have entered these settlements

o To date, no defendant has successfully moved to dismiss any of these lawsuits

• FTC also has brought enforcement action over agreements to limit wage competition (In re Your Therapy Source et al.)

State AGs and Plaintiffs’ Bar Have Also Been Focused On No-Poach Agreements


• 1-800 Contacts – IP-antitrust interface

o 1-800 Contacts alleges competitors are infringing marks and enters into settlement agreements

o FTC challenges settlements as agreements not to compete for online search terms/keywords, harming competition for online sale of contact lenses and search advertising auctions

o ALJ and Commission hold that agreements were unlawful restraints of trade

o Class actions follow

• Qualcomm – IP-antitrust interface continued

o One of the final cases filed before Trump inauguration, Democratic-led FTC sued Qualcomm, claiming patent licensing terms were unfair methods of competition

o Chairman Simons recused, meaning may have 2-2 Commission split on whether to settle

o On Nov. 6, 2018, district court granted FTC’s motion for partial summary judgment, finding that Qualcomm was required to license its standard essential patents (SEPs) to modem chip suppliers

Key Civil Non-Merger Enforcement Actions


• AmEx – two-sided markets

o DOJ and 17 states challenged credit card companies’ “anti-steering” rules with merchants

o District court held rules violated Section 1 of Sherman Act; Second Circuit reversed

o Ohio and 10 states sought cert.; DOJ said decision was wrong but opposed cert.

o Supreme Court affirmed and said need to evaluate both sides of two-sided “transactions” market

o Key question going forward: When do you have a two-sided market?

• Apple – antitrust in a tech world

o Private class action alleging that Apple monopolizes the market for App Store purchases by requiring app developers to sell only on its platform and collecting a 30% commission

o Illinois Brick generally precludes indirect purchasers from pursuing federal antitrust claims

o Key issue in Apple: Are consumers direct or indirect or purchasers (i.e., are they buying apps from Apple or developers)? (Another question – is the App Store a two-sided market?)

o Broader issue: How does Illinois Brick apply in tech/online space and/or will doctrine be reversed?

Key Civil Non-Merger Enforcement Actions


What To Expect In 2019?


Likely DOJ Developments

• Changes in senior leadership team

• Criminal no-poach prosecutions

• IP-related enforcement action

• Uptick in criminal enforcement statistics

• Increased focus on Big Tech companies


Likely FTC Developments

• Continued aggressive enforcement in key industries, particularly healthcare …

• … But more cautious approach in vertical mergers

• Increased focus on big data/platforms/tech companies

• Use of studies, including retrospective studies, as foundation for enforcement

• Competition hearings results in more aggressive policy/enforcement in select area


Questions?


Juan A. ArteagaContact Info and Bio

Juan A. [email protected]

Juan A. Arteaga is a partner in the Antitrust and White Collar & Regulatory Groups in Crowell & Moring’s New York office. His practice focuses primarily on advising companies, boards of directors, and executives on a broad range of civil and criminal antitrust matters, including litigation, merger reviews, government and internal investigations, and counseling regarding various business practices. Juan also represents clients in a wide range of high-stakes, complex commercial litigation matters, including securities litigation, shareholder derivative actions, class actions, and international arbitrations.

Since joining Crowell in July 2017, Juan has represented AT&T in connection with its $85 billion acquisition of Time Warner and United Technologies Corp. in connection with its $30 billion acquisition of Rockwell Collins. He has also advised clients on several non-public transactions and government investigations.

From 2013 until 2017, Juan was a senior official in the Antitrust Division of the U.S. Department of Justice. During this period, he served as the Deputy Assistant Attorney General for Civil Enforcement, where he worked on and oversaw investigations and litigation in various industries, including financial services, semiconductors, aviation, food and beverage, health care, technology, cable, manufactured products, transportation, and telecommunications. Juan also served as Chief of Staff and Senior Counsel to the Assistant Attorney General for the Antitrust Division. In this role, Juan helped oversee all aspects of the Antitrust Division’s enforcement programs and operations.

While at the Antitrust Division, Juan worked on various high-profile merger investigations and litigations, including Aetna/Humana, Haliburton/Baker Hughes, Electrolux/General Electric, US Airways/American Airlines, Energy Solutions/Waste Control Specialists, and National CineMedia/Screenvision. He received the Antitrust Division’s Award of Distinction on multiple occasions for his significant contributions to the Division’s mergers and anticompetitive practices enforcement program.

Juan was named a 2018 “Distinguished Leader” by the New York Law Journal, a 2018 “Rising Star” by the Minority Corporate Counsel, a 2018 “Catalyst” by the Council of Urban Professionals, selected to the Ethisphere Institute’s 2017 “Attorneys Who Matter” list, a 2017 “Rising Star in Competition” by Law360, a 2016 “New York Rising Star” by the New York Law Journal, and a 2012 “Top Lawyer Under 40” by the Hispanic National Bar Association. He has also received several awards for his pro bono work and serves on the board of several non-profit organizations.

Areas of PracticeAntitrustCivil and Criminal Antitrust InvestigationsMergers & AcquisitionsWhite Collar & Regulatory Enforcement Commercial LitigationLitigation & Trial

EducationColumbia Law School, J.D.Columbia Law ReviewHarlan Fiske Stone Scholar

Boston College, B.A.Magna Cum LaudePhi Beta Kappa


Alexis J. GilmanContact Info and Bio

Alexis J. [email protected]

Alexis J. Gilman is a partner in the Antitrust Group in Crowell & Moring’s Washington, D.C. office. His practice focuses primarily on advising and representing clients on a broad range of civil antitrust matters, including merger reviews, government investigations, and litigation, with a particular focus on healthcare, retail, and consumer goods merger investigations by the Federal Trade Commission, Department of Justice, and state attorneys general offices. Since joining Crowell, Alexis has represented AT&T in its $85 billion acquisition of Time Warner, and has represented and counseled healthcare providers, health insurers, retailers, and clients in a variety of other industries in non-public merger and counseling matters.

From 2014 until 2017, Alexis served as the Assistant Director of the Mergers IV Division in the Bureau of Competition of the Federal Trade Commission where he had leading roles in and oversaw investigations and litigations in various industries, including hospitals and other healthcare providers, distribution services, supermarkets, funeral homes, casinos and online gaming, retail, and consumer goods. Prior to this position, Alexis served as a Deputy Assistant Director of the Mergers IV Division from 2012-2014, working on and supervising investigations and litigations in the Division. While at the FTC, Alexis worked on several high-profile merger investigations and litigations, including Sysco/US Foods, Staples/Office Depot, DraftKings/FanDuel, ProMedica/St. Luke's, Dollar Tree/Family Dollar, Albertsons/Safeway, Phoebe Putney/Palmyra, Advocate/NorthShore, Cabell/St. Mary’s, Mountain States/Wellmont Health System, CHS/HMA, Office Depot/OfficeMax, and Pinnacle/Ameristar.

Prior to joining the FTC, Alexis was an associate in the Antitrust Group of a large U.S.-based law firm, where he represented Fortune 500 companies in high-profile U.S. and foreign merger investigations and other civil antitrust matters. He represented pharmaceutical, publishing, retail, chemical, energy, and private equity clients, among others.

Areas of PracticeAntitrustFood & BeverageRetail & Consumer ProductsHealth CareMergers & AcquisitionsLitigation & TrialRegulatory & Policy

EducationGeorge Washington University Law School, J.D.

Williams College,B.A., Political Economy


Christine L. WhiteContact Info and Bio

Christine L. WhiteVice President – Legal AffairsNorthwell [email protected]

Christine White currently serves as Vice President, Office of Legal Affairs, at Northwell Health, Inc., which is a health system with 22 hospitals and a full complement of ancillary services, approximately $11 billion in annual revenue and more than 60,000 employees. During her tenure, Ms. White has assisted Northwell Health in advancing its commitment to improve and expand the scope and accessibility of high-quality cost efficient health care services through acquisitions, affiliations and joint ventures with other hospitals, health systems and provider groups.

Prior to joining Northwell Health, Christine worked at the Federal Trade Commission, resident in both the Northeast Regional Office in New York, N.Y. and the Health Care Division in Washington, D.C. During her tenure in the Northeast Regional Office, Christine received the FTC Award for Outstanding Scholarship based on her work as a lead author and editor of Antitrust and Health Care: A Comprehensive Guide (1st ed.), Washington, DC: American Health Lawyers Association, 2013. During her earlier tenure in the Health Care Division, she received the Stephen Nye Award as the outstanding junior attorney. Additionally, Christine spent roughly one decade as a partner in the health law and antitrust practice groups of national law firms. She also briefly served as a Technical Advisor to the Russian Federation on antitrust matters, resident in Russia.

Christine is co-author and co-editor of the healthcare antitrust treatise: Antitrust and Health Care: A Comprehensive Guide (2nd ed.), Washington, DC: American Health Lawyers Association, 2017, and other notable publications. She also is an active member of the American Health Lawyers Association, where she currently serves on the Board of Directors. In addition, Christine is a member of the Executive Committee of the Antitrust Section of the New York State Bar Association, the Antitrust Section of the New York City Bar Association and the Antitrust Section of the American Bar Association. She holds a J.D. and M.P.H. from Boston University and a B.A., cum laude, from Wellesley College.

EducationBoston University, J.D., M.P.H.

Wellesley College,B.A.


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antitrust enforcement under the trump administration · crowell & moring | 1 antitrust...

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